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Consider the following statements with reference to the criteria used by the Finance Commission of India for the devolution of funds to the States:
Under the income distance criterion, States with lower per capita income would be given a higher share to maintain equity among States.
Under the demographic performance criterion, lower devolution is made to the States having lower fertility rates.
Which of the statements given above is/are correct?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither ·1 nor 2
Correct answer is option 'A'. Can you explain this answer?
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Consider the following statements with reference to the criteria used...
Finance Commission is set up under Article 280 of the Constitution, its core responsibility is to evaluate the state of finances of the Union and State Governments, recommend the sharing of taxes between them, and lay down the principles determining the distribution of these taxes among States. In November 2017, the President of India constituted the 15th Finance Commission and appointed former Planning Commission member NK Singh as its chairman.
Criteria used by Finance Commission for financial devolution:
- The Finance Commission uses certain criteria when deciding the devolution to states. For example, the income distance criterion has been used by the 14th and 15th Finance Commissions. Under this criterion, states with lower per capita income would be given a higher share to maintain equity among states. So, statement (1) is correct.
- The 15th Finance Commission has introduced the demographic Performance criterion. The Demographic Performance criterion is to reward efforts is made by states in controlling their population. This criterion has been computed by using the reciprocal of the total fertility ratio of each state, scaled by 1971 population data. This has been done to assuage the fears of southern States. States with a lower fertility ratio will be scored higher on this criterion and will get a higher share of devolution. So, statement (2) is not correct.
Therefore, the correct answer is (a).
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Consider the following statements with reference to the criteria used...
Understanding the Finance Commission of India
The Finance Commission of India plays a crucial role in the distribution of financial resources between the central government and the states. It uses various criteria to ensure equitable devolution of funds. Let’s analyze the two statements provided.
Statement 1: Income Distance Criterion
- Under this criterion, states with lower per capita income are allocated a higher share of funds.
- This approach aims to maintain equity among states, ensuring that those with less financial capacity receive more support.
Statement 2: Demographic Performance Criterion
- This statement suggests that states with lower fertility rates receive lower devolution of funds.
- However, this is incorrect. The demographic performance criterion rewards states that have successfully managed their population growth, which typically includes those with lower fertility rates.
Conclusion
- Statement 1 is correct: States with lower per capita income receive a higher share to promote equity.
- Statement 2 is incorrect: Lower fertility rates do not lead to lower devolution; rather, states with better demographic management may receive more funds.
In summary, only the first statement is accurate, making the correct answer option 'A'.
The Finance Commission of India plays a crucial role in the distribution of financial resources between the central government and the states. It uses various criteria to ensure equitable devolution of funds. Let’s analyze the two statements provided.
Statement 1: Income Distance Criterion
- Under this criterion, states with lower per capita income are allocated a higher share of funds.
- This approach aims to maintain equity among states, ensuring that those with less financial capacity receive more support.
Statement 2: Demographic Performance Criterion
- This statement suggests that states with lower fertility rates receive lower devolution of funds.
- However, this is incorrect. The demographic performance criterion rewards states that have successfully managed their population growth, which typically includes those with lower fertility rates.
Conclusion
- Statement 1 is correct: States with lower per capita income receive a higher share to promote equity.
- Statement 2 is incorrect: Lower fertility rates do not lead to lower devolution; rather, states with better demographic management may receive more funds.
In summary, only the first statement is accurate, making the correct answer option 'A'.
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Consider the following statements with reference to the criteria used by the Finance Commission of India for the devolution of funds to the States: Under the income distance criterion, States with lower per capita income would be given a higher share to maintain equity among States. Under the demographic performance criterion, lower devolution is made to the States having lower fertility rates. Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither ·1 nor 2Correct answer is option 'A'. Can you explain this answer?
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Consider the following statements with reference to the criteria used by the Finance Commission of India for the devolution of funds to the States: Under the income distance criterion, States with lower per capita income would be given a higher share to maintain equity among States. Under the demographic performance criterion, lower devolution is made to the States having lower fertility rates. Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither ·1 nor 2Correct answer is option 'A'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements with reference to the criteria used by the Finance Commission of India for the devolution of funds to the States: Under the income distance criterion, States with lower per capita income would be given a higher share to maintain equity among States. Under the demographic performance criterion, lower devolution is made to the States having lower fertility rates. Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither ·1 nor 2Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements with reference to the criteria used by the Finance Commission of India for the devolution of funds to the States: Under the income distance criterion, States with lower per capita income would be given a higher share to maintain equity among States. Under the demographic performance criterion, lower devolution is made to the States having lower fertility rates. Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither ·1 nor 2Correct answer is option 'A'. Can you explain this answer?.
Consider the following statements with reference to the criteria used by the Finance Commission of India for the devolution of funds to the States: Under the income distance criterion, States with lower per capita income would be given a higher share to maintain equity among States. Under the demographic performance criterion, lower devolution is made to the States having lower fertility rates. Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither ·1 nor 2Correct answer is option 'A'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements with reference to the criteria used by the Finance Commission of India for the devolution of funds to the States: Under the income distance criterion, States with lower per capita income would be given a higher share to maintain equity among States. Under the demographic performance criterion, lower devolution is made to the States having lower fertility rates. Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither ·1 nor 2Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements with reference to the criteria used by the Finance Commission of India for the devolution of funds to the States: Under the income distance criterion, States with lower per capita income would be given a higher share to maintain equity among States. Under the demographic performance criterion, lower devolution is made to the States having lower fertility rates. Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither ·1 nor 2Correct answer is option 'A'. Can you explain this answer?.
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